ALPHARETTA, Ga. — Angelica Corp., which provides healthcare linen and medical laundry services, has entered into an asset purchase agreement (APA) with an entity affiliated with KKR, the company reports.
Angelica says the KKR affiliate will acquire substantially all of the company’s assets as a going concern in a transaction valued at approximately $125 million, plus certain assumed liabilities.
KKR is a global investment firm that partners with companies and management teams to help them achieve operating and financial results. KKR is a long-term investor, and the company says it intends to build on Angelica’s success and help it continue to grow.
Under the terms of the APA, the KKR affiliate will serve as the “stalking horse bidder” in a court-supervised sale process. To facilitate the sale process, Angelica says it filed voluntary petitions April 3 for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.
Angelica intends to conduct the sale process pursuant to Section 363 of the Bankruptcy Code. Accordingly, the APA is subject to higher and better offers, among other conditions.
“We believe the actions we are taking will strengthen our financial foundation and allow Angelica to serve our customers better,” says David A. Van Vliet, president and CEO of Angelica. “Over the last several months, we undertook a comprehensive review of our strategic options with the support of our private equity investors and with the help of our outside advisors. The decision to pursue a court-supervised sale of our business as a going concern is the culmination of this process, and we believe it will provide Angelica with financial flexibility and the resources needed to invest and grow.”
Angelica says it expects to continue operating as normal throughout this process.
“We are pleased to enter into this agreement with Angelica, an industry leader with a national footprint and long-term partnerships with key customers,” says Rony Ma, principal on KKR’s credit team. “We believe that its pioneering, comprehensive technology solutions and best-in-class service provide a strong foundation for future growth. Once this process is completed, we look forward to working with the Angelica management team and all of its dedicated employees to build on Angelica’s success.”
“We are the leading provider of linen services to the healthcare industry, serving more than 3,800 hospitals, clinics and long-term care facilities across the country," says Van Vliet. "In light of industry-wide challenges, we have made critical investments in our business over the last several months. I want to thank our employees for their hard work and commitment to serving our customers, who will continue to be the true driver of Angelica’s future success.”
KKR says it is primarily making the investment through funds affiliated with its Direct Lending strategy.
In conjunction with the proposed transaction, Angelica is seeking court approval of a $65 million “debtor in possession” financing facility from Wells Fargo Capital Finance LLC to support the company’s continued operations during the court-supervised sale process.
Angelica says it has filed a number of customary motions seeking court authorization to continue to support its business operations during the court-supervised sale process, including the continued payment of employee wages and benefits without interruption. The company intends to pay suppliers in full under normal terms for goods and services provided after the April 3 filing date. Angelica expects to receive court approval for these requests.
Weil, Gotshal & Manges LLP is serving as legal counsel to Angelica, Alvarez & Marsal is serving as restructuring adviser, and Houlihan Lokey Inc. is serving as investment banker and financial adviser.
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